• Check out my latest article for the australian about Why the current lithium boom could be replaced by the next big thing! READ NOW

Surprising on the Upside

Surprising on the Upside

We’re delighted to see CSL announce this morning that it expects NPAT in FY13 to be 20% higher (in constant currency terms) than in FY12. Previous guidance was for 12% growth.

CSL is exactly the sort of business we like at Montgomery. Its impressive balance sheet and financial performance have earned it a Montgomery quality rating of A1 or A2 for each of the last 6 years. In addition, the strong financial position of the business has allowed it to buy back shares. As a result, earnings per share will grow faster in FY13 than the estimated 20% rate of profit growth.

High quality businesses tend to be rewarding investments for long-term investors. While the broader market sits currently at about the same level it held in 2005, CSL shares are some 250% higher. The Montgomery [Private] Fund is happy to own shares in this excellent business.


Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

Why every investor should read Roger’s book VALUE.ABLE


find out more



  1. Hi Roger / Tim,
    I have recently read value able and am trying to learn how to recognise good quality businesses with bright future prospects, while making an assessment of the intrinsic value of the business. So I have a couple of questions I guess 1. Why do you think the share price of CSL has doubled in the last 18 months or so, even though the intrinsic value of the business has not supported this? My current estimate of intrinsic value is also below the current value.
    2. What was it about CSL that made Montgomery Investment Management invest even though their NPAT growth had been relatively flat, or depreciated since 2009? (I acknowledge that their ROE had improved).
    As a side note…. I think an additional book idea Roger could be more information / explanation of how to recognise extraordinary businesses and assess their future prospects.
    Keep up the good work!

  2. I reckon if you look back using Skaffold you can get a general idea. Have a look also for discounts to forecast valuations but then you do need to be patient and accept more risk of course.

  3. Hi Roger,

    Yes CSL has had a good run since mid 2011 but with a safety margin of -38% and a share price of $50.01 it would appear way over priced with current estimates of intrinsic value out to 2015 only $41.77. Good company maybe but perhaps not the right time to buy if we follow value investing principles.


  4. Hi Roger
    I too like this business but i thought its price was getting a little too high and didnt offer much more upside (wrong again…) so i sold at about $44.
    On another subject entirely, i am currently reviewing my career opportunities/change and would like to study for a diploma in financial services with a view to the financial planning area.
    Can you suggest the minimum qualifications that would be required to get into this industry??
    Also, you put all the so called experts to shame on ‘Your money, Your call’.
    Keep up thye awesome work and i will be investing in skaffold as soon as the funds are there.

    • I was with you on this one Brad, I bought in at a fairly reasonable price of $30-$32 in the August 11 plunge. I sold in August this year at $44 after a comparatively short holding period of 1 year… I could have done a lot better holding longer; but, I saw nothing but downside at that price and at the end of the day I am not upset at making an annual profit of 37% (including dividends).

Post your comments